1. (Analyzing inventory reductions at Supervalu) In a narrative format, answer all question presented in the case. Mention some ways other than cost cutting that will improve company operations.
b. Prepare revised product-line earnings statements based on the elimination of Sugar-Bits. It will be necessary to calculate some per-unit data to accomplish this.
2. How do managers go about making segment product line elimination decisions?
What is a job order cost system? Describe a situation in which you would use job order cost information. What type of information is useful in making your decision? In your initial response, please do not use citations to convey your understanding. Based on your reading, please communicate your own understanding of the requirements.
Discuss the principal objections to the use of the cash payback method for evaluating capital investment proposals. In your initial response, please do not use citations to convey your understanding. Based on your reading, please communicate your own understanding of the requirements.
1. Complete the information requested in parts (a) and (b) of the Self-Study Review Problem on pg 463.
a. Compute the net present value of each project. Which project should Advo adopt based on the net present value approach?
b. Use the incremental revenue summation method to compute the payback period for each project. Which project should Advo adopt based on the payback approach?
a) What is meant by the expression, time value of money?
b) Why should all capital investment proposals include time value of money (present value) calculations of future cash flows that are to be received from the alternative investments?
2. Some nonfinancial factors included in capital investment decisions are more important now than they were 20-25 years ago. Give some examples of the types of nonfinancial factors that managers would consider more important in today’s capital investment decisions than they were in the past.
3 .What level of management would be involved in making capital investment decisions? Why? Why are these decisions more critical than day-to-day decisions made by individuals and companies?
